Target Costing: In the light of an ideological comparison between Japan and Sweden

In the 1960’s, the Japanese car manufacturer Toyota developed target costing – a management accounting model that reduces the risk of releasing unprofitable products. The method eventually spread to Swedish firms. The study starts by summing recent previous research on target costing in Sweden. Looking at this research, it is noted that there is an inconsistency with regards to what principles of target costing are used, and which are not. It is also noted that some firms are claimed to be used target costing and some firms are claimed not to be using it. No study, however, has tried to find an explanation to why some principles are implemented and why some are not. This is also the theoretical contribution of this thesis.More specifically, the research problems are therefore: (1) is target costing really implemented in a different way in Sweden as compared to Japan and (2), if so, why are there differences? It is further assumed that ideology could be a good explaining variable for the possible differences in implementation. In answering the first question, target costing is firstly described according to well-known books and articles on the subject…